Canadian manufacturing sales fell 0.9% in December from November, their first decline since August 2013, were up 2.7% year-over year; inventories edged down 0.3% in December from November to C$69.3B: Statistics Canada

OTTAWA , February 14, 2014 (press release) – Manufacturing sales in Canada were down 0.9% in December, the first decrease since August 2013, as transportation equipment sales declined. Notwithstanding the decline, manufacturing sales have risen in six of the past eight months and were 2.7% higher than in December 2012.

Sales were down in 15 of 21 industries, representing approximately three-quarters of total manufacturing. Constant dollar sales decreased 1.9%, indicating lower volumes of manufactured goods were sold.

Chart 1 
Manufacturing sales decline
Line chart – Chart 1: Manufacturing sales decline, from December 2008 to December 2013

Chart description: Manufacturing sales decline

CSV version of chart 1

Transportation equipment sales down in December

Transportation equipment sales were down from the 17-month high reached in November 2013. Sales in the industry fell 6.1% to $8.8 billion in December, largely reflecting a 19.4% drop in the aerospace product and parts industry. In addition, sales in each of the motor vehicle industries (assembly, body and trailer, and parts) declined.

Sales of primary metals were down 3.0% to $3.6 billion in December, the second decrease in four months. The decline mostly reflected lower volumes of product sold compared with November.

A 5.2% increase in the petroleum and coal products industry partly offset the decline in total manufacturing sales. The increase in sales was the first after three months of declines. The $7.3 billion sales level was the highest recorded in the industry since March 2012.

Largest declines in Alberta and Ontario

Sales fell in seven provinces in December, with the largest declines occurring in Alberta and Ontario.

In Alberta, manufacturing was down 2.8% to $6.2 billion. Sales of non-durable goods decreased 2.2%, mainly reflecting lower sales of petroleum and coal products, food and paper. Sales of durable goods fell 3.9%, as a result of declines in the machinery, the primary metal as well as the non-metallic mineral product industries.

Sales in Ontario were down 0.8% to $22.8 billion. Lower sales in the transportation equipment and primary metal industries were mostly offset by higher sales in the petroleum and coal products industry.

British Columbia (-2.3%) and Quebec (-0.7%) also contributed to the monthly decline.

Inventories edge down

Manufacturing inventories edged down 0.3% to $69.3 billion in December. The decline was attributable to lower inventories of aerospace products and parts, machinery, fabricated metal products as well as petroleum and coal products. Higher primary metal inventories partly offset these declines.

In the aerospace product and parts industry, inventories fell 3.0% to $7.6 billion, the largest percentage decrease since June 2013. The decline was mostly caused by lower goods-in-process inventories.

In the machinery and fabricated metal product industries, inventories were down 1.6% and 2.1% respectively. For both industries, lower inventory levels were reported by many respondents.

In the petroleum and coal product industry, inventories declined 1.6%. The decrease was almost entirely caused by a drop in goods-in-process inventories.

In the primary metal industry, inventories rose 5.3% to $7.4 billion. Approximately three-quarters of the gain reflected higher raw materials on hand at several smelters.

Chart 2 
Inventories edge down
Line chart – Chart 2: Inventories edge down, from December 2008 to December 2013

Chart description: Inventories edge down

CSV version of chart 2

The inventory-to-sales ratio edged up from 1.38 in November to 1.39 in December. The ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Chart 3 
The inventory-to-sales ratio edges up
Line chart – Chart 3: The inventory-to-sales ratio edges up, from December 2008 to December 2013

Chart description: The inventory-to-sales ratio edges up

CSV version of chart 3

Strong gain in unfilled orders

Unfilled orders rose 4.2% to $74.9 billion in December. Unfilled orders have advanced in 12 of the past 14 months, continuing to break previous highs. A strong gain in the aerospace product and parts industry was responsible for the increase in December. Excluding the aerospace industry, unfilled orders declined 1.8%.

In the aerospace product and parts industry, unfilled orders rose 8.5% to $45.5 billion, the largest increase in percentage terms since January 2013. With the latest advance, the share of aerospace unfilled orders out of total unfilled orders was 60.7%. By comparison, in December 2012, the share was 50.8%. The gain in December 2013 mostly reflected new orders received rather than an increase in the value of the US dollar relative to the Canadian dollar. Most unfilled orders in the industry are held in US dollars.

Chart 4 
Unfilled orders post strong gains
Line chart – Chart 4: Unfilled orders post strong gains, from December 2008 to December 2013

Chart description: Unfilled orders post strong gains

CSV version of chart 4

New orders rose 4.5% to $52.9 billion in December. The advance was mostly attributable to the aerospace product and parts industry. A decline in the machinery industry slightly offset the gain.

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